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Surge in Bonds
Fails to Force
Stocks Higher

By

Suzanne McGee The Wall Street Journal

Updated March 13, 1998 12:03 a.m. ET

A sharp rally in the bond market didn't help stocks extend their gains much in a lackluster trading session.

While the bellwether 30-year Treasury bond soared 1 2/32, or $10.625 for each $1,000 bond, driving the yield down to 5.861%, the Dow Jones Industrial Average retreated and other stock indexes posted only modest gains. The Dow industrials fell 16.19 points to 8659.56, while the Standard & Poor's 500-stock index advanced 1.45 to 1069.92. The strongest performance came from the Nasdaq Composite Index, which gained 7.21 to 1764.06.

"A small decline like that in the Dow isn't that bad, given how far things have come," said Michael Driscoll, listed stock trader at Hambrecht & Quist. "And we had an uptick in the futures, and in some beaten-down parts of the market later in the day that was kind of encouraging."

With less than three weeks left until the end of the first quarter, stock investors are still hunting for pockets of relative strength that they believe have the potential to go higher. Despite the fact that the Dow industrials have climbed 9.5% so far this year, and the S&P 500-stock index is up 10.25%, few money managers are willing to be left on the sidelines in case further gains lie ahead.

Meanwhile, bond-market investors shrugged off reports of robust retail sales during January and February, focusing instead on the likelihood that inflation will remain virtually nonexistent during the first quarter.

World-wide, stocks were unchanged in dollar terms. The Dow Jones World Stock Index was unchanged at 183.79.